Parrot controversy. Parrot is a protocol evolving on the blockchain Solana. The latter had its heyday in October 2021, when it amassed almost half a billion dollars in TVL. Now, the protocol is barely collecting $9 million in TVL. A recent governance proposal has thrown the protocol into chaos..
Parrot: towards a token-free protocol?
Obviously, like most DeFi protocols, Parrot has its own token: the PRT. The latter had been launched via an IDO (Initial DEX Offering). This enabled the protocol to raise $85 million. Since then, however, the token has gone from strength to strength, losing 89% of its value since the IDO.
With the project running out of steam, several community members have asked to recover their initial investment in the project. As a result, the protocol teams recently submitted a proposal to abandon the PRT token and become a tokenless protocol. To achieve this, the teams propose to implement a massive token redemption system at $0.0045 each. To finance this vast program, Parrot would use between $50 and $73 million held in its treasury.
By way of comparison, the token sold for between $0.037 and $0.0412 at IDO. Thus, users would only recoup a tenth of their investment.
Worse still, the Parrot would keep the 21 million remaining in the treasury after user reimbursements.
Binance offers you 1 chance to win 1 bitcoin! Register now by clicking on the button >>;
« A vast farce »: the anger of the community
It didn’t take long for the community to take notice. Across all Parrot Protocol networks, the community is voicing its displeasure at the proposal.
Indeed, some are calling the proposal a « vast farce ». Indeed, they accuse the Parrot team of having used their tokens in the vote, which they have prematurely cancelled. unlocked before the original November deadline.
Moreover, this proposal was put to the vote without going through the governance forum. This is normally used to obtain the feeling of the whole community.
For his part, @gopartyparrot, a member of the protocol team has attempted to put out the fire. He refuted several accusations, including that of voting with treasury tokens.
« One of the main factual errors is that the team owns 5.4 billion Parrot tokens, and would have appropriated 6.4 billion yPRT from the treasury and protocol-controlled value. We do not touch or vote with cash tokens. »
Nevertheless, as these statements are not shared with any evidence, it is difficult for the community to form a clear idea about this case.
DAO: what happened to decentralization?
This example once again demonstrates the weaknesses of decentralized governance, particularly through the use of tokens as voting power.
Indeed, a total of 1.35 billion PRT tokens were deposited in favor of the proposal. However, 1.283 billion of these tokens voted in favor of the proposal. came from just 3 addresses.
So, once again, the decision will be made by a handful of whales, to the detriment of the mass of small whalers.
For their part, the protesters have so far only gathered 7 million tokens against and represent 0.5% of the votes.
This story is reminiscent of Solend’s setbacks in June 2022. This protocol had also highlighted the limits of decentralized governance by DAO.
Bored with plutocracy? Register now on Binance, the leading crypto platform, to get down to business and try to win the game and add 1 bitcoin to your portfolio. What do you decide?